SMALL businesses have been warned that they face an increased risk of fraud during periods of rapid growth.The Fraud Advisory Panel, an independent body supported by the Institute of Chartered Accountants, says that small and medium sized enterprises (SMEs) often miss the danger signs.

It warns that opportunities for fraud could increase with the growing popularity of outsourcing and the introduction of stakeholder pensions.

"Much has been written about fraud in big business," said Mark Prentice, from the Panel's Education, Events & Training Working Group. "There is much less advice for directors and managers in SMEs,"

A recent study suggests that small businesses often overlook signs of fraud such as changes in cash flow patterns, stock shrinkage and customer complaints.Stakeholder pensions may create problems with the introduction of new payroll procedures and cash transfers to pension providers.

Fighting Fraud - a guide for SMEs is available from Helen Fay, Fraud Advisory Panel, ICAEW, Chartered Accountants' Hall, PO Box 433, Moorgate Place, London EC2P 2BJ. Tel: 020 7920 8100.